The One Sentence in the Music Modernization Act Causing Massive Controversy

The Music Modernization Act was signed into law in October 2018. Its purpose and intent was to make it easier for streaming music services like Spotify and Apple Music to get the needed licenses to use the songs they stream AND to get more songwriters paid all of their earned royalties. To accomplish this goal, a new entity called the Mechanical Licensing Collective (MLC) is being created. This entity will issue licenses and collect the money from the streaming music services and then make payments of the earned royalties to the world’s songwriters.

However, buried deep in the law is one single unnecessary controversial sentence. This sentence reveals a second hidden agenda: For the first time in the history of the United States it is now legal to transfer, redirect and redistribute the wealth and royalties of the songwriter into the pockets of the biggest music publishing companies in the United States that did not earn it.

In addition, if a songwriter figures out their money has been taken from them by these other entities, they will not legally be able to get it back.

This controversial sentence is found in in the Music Modernization Act (MMA) in section (11) Legal Protections For Licensing Activities, sub-paragraph (E) Preemption Of State Property Laws. (The full MMA can be found here)

The sentence reads as follows:

“(E) PREEMPTION OF STATE PROPERTY LAWS — The holding and distribution of funds by the mechanical licensing collective in accordance with this subsection shall supersede and preempt any State law (including common law) concerning escheatment or abandoned property, or any analogous provision, that might otherwise apply.

Let’s dissect this sentence.

“The holding and distribution of funds by the mechanical licensing collective in accordance with this subsection…”

This portion of the sentence is referring to the songwriter royalties that Spotify, Apple Music, Amazon, Google, etc pay to the Mechanical Licensing Collective for it to then pay to world’s songwriters. This is a LOT of money. Right now, estimates put that amount at over one billion dollars in earned royalties that have not made it to their rightful owner. And this is just the “old” money. Over the next five years, the amount of newly-earned money expected to be paid to the mechanical licensing collective by Spotify, Apple Music, Amazon, Google, etc is projected to be over five billion dollars.

Next it says this: “…shall supersede and preempt any ..”

This portion means the rules of this one sentence will “supersede” (meaning take the place of) and “preempt” (meaning prevent the other laws from applying) the other relevant laws already in existence. It effectively makes these other, preexisting laws null and void, and erases them as if they never existed.

Then it hammers it home by saying which old laws this new law will replace.

It starts with this

“…State law (including common law) concerning escheatment or abandoned property, or any analogous provision, that might otherwise apply.”

This means any of the laws from any of the existing 50 states that have anything to do with:

• “escheatment”:

Escheatment means that if a person earns money, but they are not locatable, the money must be given to one of the 50 states (like the state of California, Massachusetts etc) for the State to hold onto. Then the State makes a public record of the person who earned this money, thus allowing the person who earned it to find it. When they do, and they prove to the State who they are, they are able to recover and get paid their money.

• “abandoned property”:

This means “property” left by an owner who intentionally relinquishes all rights to its control. In this case, property could be the song itself or the money the song generates.

• “or any analogous provision, that might otherwise apply”:

This means there may be some other law the authors of the MMA forgot about, so they wrote this catch-all phrase to cover anything else that may exist that they also want to get rid of.

Taken all together, this one sentence means that if a songwriter earns money, and the money is not paid to the songwriter that earned it because the mechanical licensing collective has not identified them, all of the prior laws in place to protect the songwriter from having their money wrongfully taken are now gone. Instead, the rules of this one new law will now allow songwriters’ money to be taken from them and handed to the biggest music publishing companies in the United States despite these companies not earning it.

Now why would this controversial language be added? It does nothing to help with licensing. It does nothing to ensure songwriters get paid. (Actually, it does the opposite: it provides a way to take songwriter money away from them.) Further, if this one sentence was not in the MMA there would no negative impact or repercussion to any other part of the law. The music services would still be licensed. The royalties would still be generated. The mechanical licensing collective would still have the money. This provision stands out as a sore thumb.

Those that support this provision make arguments that it must be there as songwriters are “lazy” and “irresponsible”. Therefore, we must create punishments to compel songwriters to provide their information so they can get paid. Ignoring for a moment how insulting and condescending this argument is, it also absurdly assumes that artists and songwriters don’t want to be paid their money. With all due respect, the issue is not that they don’t want to get paid, it’s that the information, resources, education and knowledge they need to get paid has not been given to them. Punishing artists for not knowing about or fully understanding complex copyright law is just wrong. Before we punish them, Artists must be first offered and then given education to inform them about how to navigate the system. And even then, does it still justify taking their money?

Next arguments have been made that holding onto these “accrued but unpaid royalties” is somehow illegal or problematic from a generally accepted accounting principles

perspective. This is a not true. As a matter of fact, the traditional music industry is littered with dealing with these situations and practices over the past 90 years. If this concern was true, the entire music industry over its entire history would have been (and continue to be) operating in an illegal or unprecedented fashion.

In addition, held songwriter money can earn significant bank interest that can be used for education, outreach and infrastructure costs. And if this provision was not in the law, at some point in the future the board of directors of the MLC could propose solutions and options beyond let’s just give the songwriter’s money to the big music publishers that did not earn it.

So what is the motivation? Why is this language in the law? The answer to that question can be found by following the money. The language allows the potential billions of dollars of earned but unpaid songwriter royalties to be taken from their rightful owner and end up in the pockets of the major and large music publishing companies in the United States.

It’s important to note that these very same music publishing companies, in conjunction with their lobbying and trade organization called the National Music Publishing Association (NMPA), helped to write and pass the Music Modernization Act. If the “Preemption Of State Property Laws” provision did not work in their interest, I can assure you it would not be in the law.

In addition to supporting the inclusion of this sentence, these very same music publishing companies, in conjunction with the NMPA, have submitted an application to the US copyright office to govern and control the board of directors of the MLC. This then means the music publishers with the biggest US market share (the ones that would be getting paid the accrued but unpaid songwriter royalties when they are liquidated) would get the very money they were supposed to pay to the actual songwriter that earned it.

This may also explain why the NMPA — on behalf of its members — has fought so hard to stop any other entity without these conflicts, like the AMLC, from getting the designation. An article about possible collusion and tortious business interference by the NMPA can be read here. Another article about the NMPA attempting to eliminate the possibility of competition can be located here. There are more.

Without this one controversial sentence about the Preemption of State Property Laws, the entire plan to take songwriter’s money, hand it to the largest music publishers who also want to govern and control the MLC to recommend that they get it goes poof.

This is nuts. Why is it so controversial to have a business that pays everyone what they earned? And why would a business predicate their revenue on taking other people’s money from an entity they sit on the board of directors of?

This is why I chose to be a board member of the AMLC, the other entity applying to be the MLC.

Every songwriter and music publisher should be paid the money they earn, no matter if it’s the kid in their bedroom or SonyATV Music Publishing. No one’s money should be taken from them to the benefit of another company. And no one else should “win” if a songwriter is not paid.

To help further ensure songwriter money is not taken from them, I urge all songwriters to voice their concern or support with the US Copyright office by the end of day Monday, April 22.

Make your opinion and comments here

Tell them You Wrote It. You Earned It. Make certain the AMLC is put in charge so songwriters get their money.

Let’s stop the taking of songwriter money.